Did Political Climate Spur Gildan's American Apparel Purchase?
By now, you've probably heard the news that Montreal-based Gildan Activewear has purchased the intellectual property rights for American Apparel for about $66 million. The sale is not a surprise—American Apparel went into administration, which seemed to suggest they were looking to sell. What is a surprise, however, is Gildan Activewear's participation.
While Gildan Activewear has not delved into the reasoning behinds its decision, Fast Company speculated that the presidential election motivated the choice. Gildan stated in a press release that it will not purchase American Apparel's retail store assets, so what the company really wants are the Los Angeles factories and operations.
But, why would the American Apparel factories be so appealing to Gildan? Fast Company reported that if Donald Trump follows through with his trade changes, Gildan's acquisition could prove to be invaluable. If Trump decides to withdraw from NAFTA, or even renegotiate its terms, the abandonment of the Trans-Pacific Partnership would make domestic factories extremely valuable for companies looking to do business in the U.S.
While Gildan has not validated Fast Company's theory, it makes a lot of sense.